The Liberal Democrats ventured into one of the most controversial areas of British politics yesterday by offering a conditional amnesty to migrants who entered Britain illegally 10 years or more ago.

The Conservatives immediately attacked the plan, claiming the Lib Dems were encouraging lawbreaking.

Nick Clegg, the Lib Dem home affairs spokesman, admitted the proposals were contentious, but said: "I do not think our party should be cowed into silence by fear of controversy. Of course the politics of substance will be attacked by the merchants of spin. I say this: we cannot and should not close the door on the world."

He added: "The issue of immigration has become the dog-pit of British politics, a place where only the political rottweilers are happy to enter. Today's motion is intended to drag the debate back to where it belongs: governed by facts, not prejudice, by fairness, not vitriol."

The earned citizenship proposals advanced by Mr Clegg are conditional on a clean criminal record and an ability to speak English. The applicant would initially receive a two-year work permit and would also be required to pay a small fee or carry out some form of community work. Some estimate that there are as many as 600,000 migrants living in the country illegally, but Mr Clegg conceded the figure may be higher.

Critics such as the Migration Watch pressure group questioned how an illegal migrant would be able to prove he or she had been in the country for 10 years in the shadows, a point also made by Lord Roberts, a Liberal Democrat peer in the Lords. But Mr Clegg rejected suggestions that his proposal amounted to a blanket amnesty, and insisted it did not have the pitfalls of recent amnesties in Italy and Belgium. He said: "Our proposal is for a case by case, qualified process of legalisation that boosts integration whilst depriving people traffickers of a flow of new victims.

"Britain currently has an underclass of half a million people who are here illegally. They don't pay tax. They lack any employment rights, citizen rights or access to services from healthcare to banking."

He accused the government of having no idea how to implement its deportation policy, describing it as "absurd and a mirage".

Alongside the earned citizenship, Mr Clegg also proposed tighter exit controls and a rise in the cost of work permits for businesses. He presented the proposal, largely developed by the IPPR thinktank, as a development of existing government policy of "a long residence concession", a policy which gives permanent residence on a discretionary basis to those who have lived in Britain continuously for longer than 14 years, or seven years for children. During the 1990s, the IPPR reports, concessions were granted to only about 2,000-3,000 applicants a year, fewer than are likely to come forward under the Clegg proposal.

Mr Clegg also claimed it would be practicable to identify the length of applicants' illegal residency in Britain, probably through the date of their initial visa or asylum application. He said if it was not possible to show when the applicant entered Britain, he or she would not qualify for citizenship.

During the debate, Kate and Gerry McCann's former spokeswoman backed the Clegg plan for the reintroduction of exit checks at ports to boost child protection. Justine McGuinness said: "If we want to protect our children we have to make sure that children cannot be moved out of Europe, as well as in. That's why I feel very strongly that we must have exit checks at all ports."

The immigration minister, Liam Byrne, rejected the Clegg plan, saying: "I believe those here illegally should go home - not go to the front of the queue for jobs and benefits. That's why we're now deporting someone every eight minutes and doubling our frontline enforcement resources."

He said compulsory ID cards were being introduced for foreign nationals from next month, which would make it "tougher still" for illegal migrants to work or access benefits. "An amnesty for immigrants illegally in the UK is unnecessary and would simply create a strong pull for waves of illegal migration," Mr Byrne added.

Mr Clegg rejected as total and unqualified nonsense reports that he had come to a secret deal with Sir Menzies Campbell to take over the leadership after the next election.

Today's agenda

· Debate on constitutional package designed to rival proposals from Gordon Brown

· Setpiece speech from David Laws, new shadow education secretary, and Lynne Featherstone, shadow international development secretary

· Question and answer session on environment, including James Cameron from Climate Change Capital